The big beasts of investment are stirring. Accusations in the wake of the banking crisis that institutional investors have behaved like “absentee landlords” and that the Footsie is full of “ownerless corporations” are starting to elicit a response. The Institutional Shareholders Committee yesterday published a code of conduct suggesting how institutions should engage more effectively with the companies they own.

Not terribly new, it draws heavily from the existing statement of principles of the ISC, whose members are the Association of British Insurers, the National Association of Pension Funds, the Investment Management Association and the Association of Investment Companies. It may be that institutions are desperate to be seen to be doing something ahead of the Walker Report next week into more effective governance of banks.

But the code does spell out some laudable principles for the agents who manage our pensions and savings: that they should closely monitor investee companies; that they should have clear procedures for escalating their concerns; that they should have systems in place for organising collectively; and that they should always vote their shares and disclose how they vote. It rightly emphasises that intervention should also be considered by passive investors, like tracker funds, and by those who are “underweight” in a company and, therefore — by their perverse lights — have no interest in seeing it prosper. It is also good to the see the ISC starting to reach out to other like-minded investors, such as overseas pension funds and sovereign wealth funds.

The excuse from some institutions that shareholdings these days are too scattered and that individual stakes are too small to effect change in individual companies is both defeatist and rubbish. Institutions can still wield enormous power, especially if they act together. It is will and courage that have been lacking. That and the fear of accusations of hypocrisy — given the poor governance and pay arrangements in many of Britain’s biggest investment institutions.

Keith Skeoch, the ISC chairman and Standard Life Investments chief, is now looking at how the ISC can be reformed. His No 1 priority should be to create a robust system around which investors can instantly and effectively coalesce the moment they detect any corporate funny business.

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